The last several years have not been kind to JC Penney. Not only have they been swept up in the long-term decline of the moderate department store sector, but they also hemorrhaged huge amounts of market share during Ron Johnson’s failed re-boot. Under current leadership, the picture has not improved much. In fact, last week shares sank again after a disappointing earnings report. The stock is off nearly 90% in the past five years and some 40% year to date. Many observers have concluded that Penney’s is on a slow slide to oblivion. And while I agree that much more needs to be done to right the ship, I am cautiously optimistic. In fact, full disclosure, I bought some Penney’s shares at $3.95 earlier this week. While investing in the company is not for the faint of heart, I believe there are a few reasons to believe that the news on Penney’s going forward is more likely to be positive than not. The biggest reason for the miss on gross margin was from unusually high markdowns. Both Penney’s own store closings and those of competitors put pressure on pricing as stores liquidate merchandise. While clearly the industry is facing a great deal of promotional intensity, margin pressures should subside as the pace of store closings slows. Read more at Forbes.